Most people believe that estate taxes are now gone and there’s simply no need to do any special planning beyond the Living Trust. Wrong!

It is true that the recent federal tax overhaul raised the exemption amount (that you can pass estate tax free at death) to $11.2 million if you’re single and potentially up to $22.4 million if you’re married.  However, these higher exemption amounts are only effective through 2025, and if you pass away after that, then the exemptions are scheduled to drop back to their 2017 levels of $5.49 million single and $10.98 million married.

If your estate is less than those levels and you are still not concerned about estate taxes, consider this - - if the party in control of Congress changes, the exemption may be further reduced to as low as $1 million single and $2 million married.  If you own a home, have some savings and an IRA (or other retirement plan) or a rental property, your estate could be higher than those cutoffs and your loved ones could be burdened with significant estate taxes!

And, if all these “what-ifs” about federal estate taxes aren’t already blowing your mind, watch what the State of California may have in store for you.

Back in 1982, California voters approved Propositions 5 and 6, which prohibited any State inheritance or estate tax.  But times have changed. Sacramento legislators are looking for more tax dollars to defray cash short-falls impacting schools, healthcare and transportation. So they’ve come up with a “new” idea - - State Senate Bill 726, which already passed through Senate Committee in January 2018 and is now being considered in the State Assembly.  If passed by both Democratic houses, and then approved as a ballot measure by the majority of voters, this Bill would repeal the ban on State inheritance and estate taxes, so the “rich,” can again be taxed at death.  There’s a good likelihood that California’s voters may approve this return of estate taxes, given that 63% of those voters recently extended the “millionaire’s surtax”, a top state income tax rate of 13.3% on our “wealthiest” (highest income) residents.

Maybe You Should Look at

Some Estate Tax Planning, Now!

We highly recommend that single individuals with an estate currently valued over $5 million or married couples with estates over $10 million consider some advanced level estate tax planning right away, beyond the Living Trust.  (Smaller estates may even need to do estate tax planning as well in the future, depending upon how Senate Bill 726 turns out, which we’ll keep you appraised of.)

We, at Kavesh, Minor and Otis, may assist you with reducing or eliminating your estate taxes.  Just give us a call to arrange a free consultation.  Be sure to indicate you’re coming in to discuss “advanced level estate tax planning.”

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.